Cooped Up, Unhappy: Young Professionals Target New Homes
May 6, 2020
New-home transactions have reportedly doubled in the last two weeks alone as millennials from 31 to 40 years old show increasing demand to buy, John Burns Real Estate Consulting reports. The buyers are mostly couples and individuals who have been wanting to purchase for a long time and now, after being cooped up in a living situation they don’t like, are finally ready to make a move, Ken Perlman and Lesley Deutch, principals at John Burns Real Estate Consulting, note in a recent column. These older millennials also tend to feel secure in their jobs and are tightly focused on low payments than on future price appreciation.
Homebuilders on recent earnings calls have confirmed the trend, which is prompting them to home in on the first-time home buyer during the COVID-19 pandemic.
“First-time buyers are most likely to be living in dense apartments that lack social distancing opportunities, they don’t have a home to sell, and they are comfortable with new technology that includes viewing products and services online,” Perlman and Deutch note. Further, a quarter of couples in their mid-20s and mid-30s have two incomes and a college education, allowing them to skip the entry-level stage and purchase a first home more akin to a move-up buyer.
Young and growing families may be particularly motivated to upgrade to a new home due to the pandemic. John Burns Real Estate Consulting estimates that this segment will drive nearly 80% of household growth in the new-home market in the suburbs over the next few years.
For young couples, families, or individuals, the real estate data firm suggests builders pay careful attention to efficient use of square footage that keeps price points in check, and lure this segment with home offices or flexible workspaces, connections to outdoor spaces, and thoughtful inclusion of windows and decks. Also, families will still likely desire open concept living, but may also be drawn to areas in a home where they can social distance from children, such as an upstairs loft area or a retreat in the master bedroom, Perlman and Deutch note.
“The Light: Does It Take a Pandemic to Get Millennials to Buy?” John Burns Real Estate Consulting (2020)
Updated: July 10, 2020